Several communications must be made between the client and the auditor. Some of

Question

Several communications must be made between the client and the auditor. Some of those communications are listed below. LIST OF COMMUNICATIONS BETWEEN CLIENT AND AUDITOR (a) Lawyer's response to a letter of inquiry. (b)Management representation letter (c) Engagement letter. (d) Management letter. (e) Internal control deficiencies. (f) Communications with individuals charged with governance REQUIRED: For each of the items listed above, indicate the following information about the communication. (1) The person(s) responsible for signing the communication. (2) Whether the communication is required or optional under generally accepted (3) (4) auditing standards (GAAS) At what point in the audit process the communication should be sent. The purpose of the communication.

Explanation / Answer

(a) Lawyer's Response to Letter of Enquiry: Generally The Auditor asks the Managment to Provide a Letter about the Litigations and Contingencies Currently with the Company. Further Auditor can also request management to send a letter of enquiry to the Lawyer of the Company to ensure that Company has disclosed all the fact

1. Managment is responsible to Inquire the Lawyer.

2. It is required as per GAAS 337 Inquiry of Clients Lawyer regarding Litigations, claims and assessment.

3. During the Course of Audit

4. To get External Confirmation from External Sources that Managment has Provided the Exclusive list of all litigation and assessment pending.

(b) Managment Representation Letter: Representation Letter from management regarding financial statements and assertions used thereon.

1. Managment and Those charges with Govt signs the Letter

2. Communication is required as per GAAS 333, Managment Representation

3. This is Taken Before Finalization of Audit

4. To Ensure that all the representation oral or written made by management during the course of the audit is good with the management

(c) Engagement Letter: Issued by Auditor to Client.

1.Auditor Issue Engagement Letter.

2. Communication is required as per GAAS 210, Engagement Letter.

3. This is Taken at the Initial Stage Before Starting Audit

4. It Agrees with Managment with the Terms of Engagement and also Ensures that the Preconditions to the Audit are Fulfilled.

(d) Managment Letter: It is issued by the Auditor to Managment highlighting Material Weakness and Significant deficiencies in Internal Control.

1. Issued By Auditor

2. It is Only issued when there exists any Material Weakness or significant deficiencies in Internal Control so the same is to be reported to the Managment.

3. It is Issued During the Audit when such deficiencies come to the Knowledge of the Auditor

4. It Highlights Management about the Material Weaknesses and Significant deficiencies in internal control also any other things which the auditor thinks should be in the knowledge of the management.

(e) Internal Control Deficiencies:

1. The Auditor should at first stage of finding Internal Control Deficiencies issues a letter to Those Charged with governance highlighting the issue if the same is not properly resolved by those charged with governance then report the same to management through Managment Letter.

2. It is Only issued when there exists any Material Weakness or significant deficiencies in Internal Control so the same is to be reported to Those Charged with Governance.

3.  It is Issued During the Audit when such deficiencies come to the Knowledge of the Auditor but before Managment Letter.

4. It Highlights governance about the Material Weaknesses and Significant deficiencies and also key findings in the audit in internal control and at other areas also any other things which the auditor thinks should be in the knowledge of the management.

(f) Communication with Individual Charges with Governance: All Key Findings including understanding the process of financial reporting and audit should be done on a regular intervals as and when required by the standards.

1. Auditor Should Issue

2. GAAS-210

3. During the Audit

4. Kept in Knowledge Key Findings ReportiRequirementsent and Any other Deficiencies to those charged with governance

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.